A mortgage is created when a person (a borrower) pledges (or mortgages) a house and/or his land to a lender to secure the repayment of his/her loan. If a borrower falls behind in his/her payments, a lender will then try to foreclose the home in order to resell it to repay the money it lent.

South Carolina law says that all foreclosures must be done in court and only a judge can order the sale of your house. Therefore, if you fall behind in paying your mortgage, a lender will file papers with the court and ask for the court to find that you owe them a debt and to sell your home to cover the loan.

You will be “served” papers to let you know that this process has begun, and then you generally have 30 days to send an answer to the lawyers and to make any claims you may have against the lender.

If you do not serve and file an answer, the court may give a “default judgment” at a hearing, and the lender can then sell your property and use that money to pay off the debt and the legal costs for bringing the foreclosure.

If you do answer or make a counter-claim, then there will be a hearing to see if you will be allowed to keep your home or if the property must be sold.

If the court gives the lender permission to sell the property, the lender must advertise the sale for three weeks in a local newspaper and then the house is sold "on the courthouse steps."

Are there ways the lender and I can work together to prevent me from losing my home?

Yes. Your lender might modify your loan depending on your loan type. The largest modification program is a federal government program called the Home Affordable Modification Program (HAMP). Your lender must offer you a chance to apply for HAMP if your loan could be eligible for the program. If you qualify for HAMP, your total house payment could be reduced to a more affordable amount.

Many lenders also offer “in-house” programs that allow you to temporarily lower your payment while you get back on your feet. They can be complicated, and it is best to go through a qualified housing counseling program to help you through this process.

Remember: Just because you are talking to your lender, the foreclosure process does NOT necessarily stop.

What can I do if my home is in foreclosure?

If you find yourself in default, and the foreclosure process has begun, take it very seriously, as you could lose your home.

Contact a lawyer. A lawyer can help to determine whether you have any defenses or counterclaims to the foreclosure. There are defenses and counterclaims that you may not even know about that may force the bank to work with you to save your home.

You can sell your own home. If you do decide to do this, talk to a few different real estate agents to get a better idea of what your house is worth. You may be able to sell your home for less than you owe, this is called a “short sale”. The lender may agree to accept this and write off the rest of what you owe. There are possible tax implications with this, so you should speak with an attorney or tax professional.

You can work with your lender to try and negotiate a “deed-in-lieu” of foreclosure. Often referred to as “cash for keys”, this means that you are deeding the house back to the lender. If the lender agrees, the foreclosure will be cancelled and the amount owed under the mortgage may be forgiven. There are possible tax implications with this, so you should speak with an attorney or tax professional. These materials are for informational purpose only and are not intended to be and should not be mistaken for legal or tax advice. You should contact an attorney or tax professional to obtain advice with respect to your situation.

Explore programs, such as SC HELP, to see if there are resources available to help you stay in your home.